Activating Windows is something that takes place after you enter your serial number. Your computer will need to be online, and then it will contact Microsoft over the Internet to verify that your serial number hasn't been used too many times.

If your computer is not online, or if the activation process fails, you will be given a phone number where you can call Microsoft's hotline for further assistance.

If Windows 7 tells you that a serial number is invalid when it shouldn't be, this can sometimes indicate that it is an upgrade serial number but the installer hasn't detected a previous Windows installation on the hard disk.